McGinnis v. Fidelity & Casualty Co.

Piper notified appellant herein of the action and demanded that appellant insurance company defend him according to the terms of his liability policy of insurance. Appellant, disclaimed liability upon the ground the policy coverage paid for by Piper did not include accidents occurring off the premises. Piper retained private counsel to defend the action. In a non-jury trial the court found that Piper was negligent in selling the gunpowder to Kevin, a violation of Health and Safety Code sections 12101.5 and 12000, and that Kevin’s injuries were the direct and proximate result of Piper’s negligence. A judgment against Piper in the sum of $22,254.44 was entered.

Piper, as the insured under the policy of liability insurance issued by appellant, assigned his claim of coverage under the policy to respondents herein. They brought this action on the policy to recover the amount of damages awarded against Piper in the prior action. As assignee of Piper’s rights, respondents recovered judgment against appellant for. the unpaid balance due under the Piper judgment.

The basic question is whether the Owners’, Land-. lords’ and Tenants’ Schedule of the liability policy issued by appellant to Piper covered the hazard which gave rise to the injuries to the minor, Kevin John McGinnis, upon which the judgment against Piper was based.

[17]

By the general liability provision of the policy, appellant agreed: “To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person, caused by accident and arising out of the hazards hereinafter defined.”

The general clause, as in most liability policies, then catalogued a list of defined specific hazards. The one pertinent to the case at bench reads: 11 Division The ownership, maintenance or use of the premises, and all operations necessary or incidental thereto. ’ ’

However, the general coverage was followed by a limiting clause which defined a particular kind of liability that was not covered unless an additional premium was paid. This specific coverage for which Piper did not pay a premium is defined as follows: “Division Operations.

“(1) Goods or products manufactured, sold, handled or distributed by the named insured or by others trading under his name, if the accident occurs after possession of such goods or products has been relinquished to others by the named insured or by others trading under his name and if such accident occurs away from premises owned, rented or controlled by the named insured. ...”